Labor Relations in Other Countries
Labor relations systems vary from country to country because unions mean different things in different countries. In the United States, labor relations involves collective bargaining and labor contracts, but in Sweden and Denmark it involves national wage setting, in Japan it involves enterprise unions that cooperate with company management, in Great Britain it involves union affiliation with the Labour Party, and in Germany it involves union representation on the company’s board of directors.22 Moreover, the shrinking percentage of private-sector employees represented by unions in the United States is not a world trend. Unions not only represent a large portion of the labor force in most other industrialized countries, but are also important factors in the labor relations systems of many of those countries.
Figure 15.2 compares union membership as a percentage of the labor force in 13 industrialized countries, including the United States. Union membership as a percentage of the labor force is higher in most European countries, with Italy and Sweden having, respectively, 35 percent and 68 percent of their workers represented by unions in 2010. Although unionism declined in Great Britain in the 1980s, British unions still represented 27 percent of the workforce in 2010, more than double the percentage of U.S. workers. Even in Japan, whose firms seek to avoid unions when they locate factories in the United States, 18 percent of workers are unionized. This is significantly higher than the U.S. percentage.23
Percent of Total Civilian Wage and Salary Employees Belonging to Unions Year United States Canada Austria Australia Japan Denmark France Germany Italy Netherlands Sweden Switzerland United Kingdom 1965 28 28 46 — 36 63 20 38 33 40 68 32 45 1970 30 31 43 — 35 64 22 37 43 38 75 31 50 1975 29 34 48 — 35 72 23 39 56 42 83 35 53 1980 25 35 47 — 31 86 19 40 62 41 88 35 56 1985 17 36 47 — 29 92 17 40 61 34 95 32 51 1990 16 36 43 34 25 88 — — — 28 95 31 46 1995 14 37 39 35 24 78 9 26 32 23 87 23 32 2001 13 30 40 28 20 88 9 30 35 27 79 24 29 2010 11 27 29 19 18 69 8 19 35 19 68 17 27
FIGURE 15.2 Union Membership in Selected Countries, 1965–2010
Sources:Based on OECD.StatExtracts. (2013). Trade union density. www.stats.oecd.org ; Visser, J. (2006, January). Union membership statistics in 24 countries. Monthly Labor Review, 45; European Foundation for the Improvement of Living and Working Conditions (2002); The Economist. (2003, June 7). Special report: Trade unions, 60; International Labor Organization (1997); and Chang, C., and Sorrentino, C. (1991, December). Union membership statistics in 12 countries. Monthly Labor Review, 48.
How Unions Differ Internationally
One analysis of unionism around the globe suggests that unions in different countries have different priorities.24 As we have seen, U.S. unions place a very strong emphasis on economic issues, particularly pay, benefits, and job security. For example, in recent years outsourcing has become a major concern of U.S. unions, because the first jobs to be subcontracted tend to be blue-collar jobs, the union’s mainstay.25 Compared to unions in other countries, U.S. unions place much less emphasis on political issues. Political involvement is just another means to address economic concerns.
At the other end of the spectrum, unions in France tend to be much more politically involved and less concerned with economic issues. The two largest labor confederations in France have clear political orientations, and one is even religiously oriented. Strikes in France tend to focus on political change as the primary means of protecting or improving conditions for union members. In 2010, French unions led a political protest of up to 3 million people, who marched in the streets of France to voice their opposition to a law that would increase the legal minimum retirement age from 60 to 62 years.26 Unions in Spain also use political tactics to carry out their goals. For example, in 2002 Spanish unions collaborated to organize a one-day general strike to convince the political leaders to reject the government proposal to lower the level of unemployment benefits for Spanish workers. A general strike is a work stoppage of all organized labor over a brief, predetermined time period that is designed to influence the government to support a particular political goal representing the interests of workers.27
In China, unions are low in both economic and political involvement, because of the pervasive control of the Chinese Communist Party over both political and economic affairs. While the right to strike has been illegal in China, this restriction may be changing after workers in a Chinese Honda plant successfully used the strike in 2010 to achieve higher wages. China is now considering a law that will relax the ban on strikes if the union first attempts to negotiate peacefully with management over the relevant economic issues.28 Finally, Swedish unions tend to have a high degree of economic and political involvement. Swedish trade unions are often represented on governmental commissions in addition to actively representing their workers in economic affairs.29 The Manager’s Notebook “Chinese Employees Protest Working Conditions at Foxconn and Get Improvements in Workplace Representation” explains how employees gained greater representation in their union at Foxconn as a consequence of negative publicity from poor employee working conditions that attracted a lot of attention in the global media.
MANAGER’S NOTEBOOK Chinese Employees Protest Working Conditions at Foxconn and Get Improvements in Workplace Representation
Global
Foxconn is the world’s largest contract manufacturer and employs over 1.4 million people in China who produce electronic devices for global firms such as Apple, Hewlett-Packard, and Samsung. It received bad publicity in 2010 when a series of 10 employee suicides occurred at the company in protest of harsh working conditions that included long hours of overtime, low wages, and lack of an employee voice to influence managers to make improvements. For example, Foxconn employees routinely worked 16 hours per day, working in silence (talking was forbidden), and with only a few minutes allowed for toilet breaks. In response to the employee suicides, several noisy protest campaigns led by labor activists occurred that created additional bad publicity for Foxconn. These mass protests were followed by a request by Apple Inc., one of Foxconn’s largest customers, to have the Fair Labor Association (FLA) audit Foxconn’s labor practices.
Although Foxconn employees are supposed to be represented by the official labor union, called the All-China Federation of Trade Unions (ACFTU), the union is under the control of the Communist Party and is dominated by the interests of the employer and the Communist Party. Consequently, few employees are represented at the local ACFTU union at Foxconn.
However, Foxconn decided to make changes in its employment practices and working condition for factory employees in order to improve its reputation as an employer, which was tarnished due to the employee protests that became an international cause. Although employee wages at the company were raised by 25 percent and overtime hours were reduced, the most far-reaching consequence was that the company decided in 2013 to increase the number of employees who would be given a voice within the union committees to represent the interests of Foxconn employees. This greater responsiveness of the union at Foxconn to employee concerns may eventually influence other unions within the ACFTU to give a greater voice to Chinese employees at the workplace.
We now turn our attention to two labor relations systems that have achieved high productivity and cooperation between unions and management: those of Germany and Japan.
Labor Relations in Germany
German law requires that all corporations involve workers in decisions at both the plant and the corporate level. This system is sometimes called industrial democracy. As practiced in Germany, industrial democracy means workers are represented at the plant level in works councils and at the corporate level through codetermination.
Works councils are committees composed of both worker representatives and managers that have responsibility for governing the workplace. They participate in operational decisions, such as the allocation of overtime, the discipline and discharge of workers, the hiring of new workers, and training.30 At the plant level, works councils make many decisions on which unions in the United States would bargain with management. In Germany, unions are organized on an industrial basis, with unions representing metal workers, chemical workers, public sector employees, and so on. In recent years some German unions have merged, and the largest unions, such as IG Metall and Verdi, represent a collection of different industries. On issues such as wages, German unions focus on bargaining across industries rather than on bargaining within an industry, as is typical in the United States. However, the unification of Germany’s high-wage West and lower-wage East means that unions and employers need more wage flexibility in labor contracts. Currently, more wage agreements are occurring at the company level in Germany.31 Works councils are also used in several other countries in addition to Germany. Austria, France, Belgium, the Netherlands, and Sweden have enacted laws that require that large companies organize works councils to represent the interests of employees.32
Codetermination brings worker representation to a corporation’s board of directors. With one-third to one-half of their boards of directors representing workers, German companies are likely to give employees’ needs a high priority.33 (The other board members represent the shareholders.) Not surprisingly, codetermination has fostered a spirit of cooperation between workers and managers. For the German economy, the results have been fewer strikes and higher productivity. For workers, the results have been both greater responsibility and greater security. For example, IG Metall, Germany’s largest union, has taken the lead on a number of important issues instead of merely reacting to company proposals. The union’s group-work policies, the product of nearly two decades of research and activism, are designed to protect workers from layoff or transfer to lower-paying jobs.
Labor Relations in Japan
Japan has developed a successful labor relations system characterized by a high degree of cooperation between unions and management. A key factor in this success has been the Japanese enterprise union. The enterprise union , which represents Japanese workers in large corporations such as Toyota, Toshiba, and Hitachi, organizes the workers in only one company. This practice ensures that the union’s loyalty will not be divided among different companies. The enterprise union negotiates with management with an eye on the company’s long-term prosperity. This labor relations system was long reinforced by large Japanese corporations’ offer of lifelong employment, which allowed Japanese workers to feel secure and unthreatened by changes in technology or job characteristics.34
The traditional lifelong employment policy has encouraged cooperation between the enterprise unions and management. Many Japanese executives started their careers as union members right out of school, advanced to a leadership position in the union, and then got promoted into management, all within the same company. Because the enterprise union’s legitimacy is unchallenged by management, there is a degree of trust and respect between the union and management in Japan that would be unthinkable in the United States. This fact helps to explain the behavior of Japanese executives who cooperate with a union in Japan but try at all costs to avoid unionization in their U.S. plants.
Unfortunately, there are signs that the labor relations systems in both Germany and Japan are in danger. In Germany, high labor costs for the average factory worker ($47 per hour versus $35 per hour in the United States) and the economic costs of unification with East Germany have forced companies to drive a harder bargain with unions.35 Competition in global markets has led to downsizings in some of Germany’s largest companies and has strained labor relations. For example, Daimler-Benz, Germany’s largest industrial company, reduced its workforce by 70,000 jobs and built a new automobile plant in Alabama, where labor costs are much lower than in Germany.36 And in Japan, a closer look at lifelong employment policies shows that they have always been restricted to the largest companies, applied only to men, and end at age 55. Moreover, downsizing in Japan has made it difficult to sustain lifelong employment policies. NTT, Japan’s giant telecommunications company, reduced its workforce by 45,000 jobs, a quarter of its total number of employees. Nissan, the automaker, from 1999 to 2002 laid off 21,000 workers and closed five auto assembly plants.37